G.R. No.
L-12541 August 28, 1959
ROSARIO U. YULO, assisted by her husband JOSE C. YULO,​ plaintiffs-appellants,
vs.
YANG CHIAO SENG,​ defendant-appellee.
Appeal from the judgment of the Court of First Instance of Manila, Hon. Bienvenido A. Tan, presiding,
dismissing plaintiff's complaint as well as defendant's counterclaim. The appeal is prosecuted by plaintiff.
The record discloses that on June 17, 1945, defendant Yang Chiao Seng wrote a letter to the plaintiff Mrs.
Rosario U. Yulo, proposing the formation of a partnership between them to run and operate a theatre on the
premises occupied by former Cine Oro at Plaza Sta. Cruz, Manila. The principal conditions of the offer are
(1) that Yang Chiao Seng guarantees Mrs. Yulo a monthly participation of P3,000 payable quarterly in
advance within the first 15 days of each quarter, (2) that the partnership shall be for a period of two years
and six months, starting from July 1, 1945 to December 31, 1947, with the condition that if the land is
expropriated or rendered impracticable for the business, or if the owner constructs a permanent building
thereon, or Mrs. Yulo's right of lease is terminated by the owner, then the partnership shall be terminated
even if the period for which the partnership was agreed to be established has not yet expired; (3) that Mrs.
Yulo is authorized personally to conduct such business in the lobby of the building as is ordinarily carried on
in lobbies of theatres in operation, provided the said business may not obstruct the free ingress and agrees
of patrons of the theatre; (4) that after December 31, 1947, all improvements placed by the partnership shall
belong to Mrs. Yulo, but if the partnership agreement is terminated before the lapse of one and a half years
period under any of the causes mentioned in paragraph (2), then Yang Chiao Seng shall have the right to
remove and take away all improvements that the partnership may place in the premises.
Pursuant to the above offer, which plaintiff evidently accepted, the parties executed a partnership agreement
establishing the "Yang & Company, Limited," which was to exist from July 1, 1945 to December 31, 1947. It
states that it will conduct and carry on the business of operating a theatre for the exhibition of motion and
talking pictures. The capital is fixed at P100,000, P80,000 of which is to be furnished by Yang Chiao Seng
and P20,000, by Mrs. Yulo. All gains and profits are to be distributed among the partners in the same
proportion as their capital contribution and the liability of Mrs. Yulo, in case of loss, shall be limited to her
capital contribution (Exh. "B").
In June , 1946, they executed a supplementary agreement, extending the partnership for a period of three
years beginning January 1, 1948 to December 31, 1950. The benefits are to be divided between them at the
rate of 50-50 and after December 31, 1950, the showhouse building shall belong exclusively to the second
party, Mrs. Yulo.
The land on which the theatre was constructed was leased by plaintiff Mrs. Yulo from Emilia Carrion Santa
Marina and Maria Carrion Santa Marina. In the contract of lease it was stipulated that the lease shall
continue for an indefinite period of time, but that after one year the lease may be cancelled by either party by
written notice to the other party at least 90 days before the date of cancellation. The last contract was
executed between the owners and Mrs. Yulo on April 5, 1948. But on April 12, 1949, the attorney for the
owners notified Mrs. Yulo of the owner's desire to cancel the contract of lease on July 31, 1949. In view of
the above notice, Mrs. Yulo and her husband brought a civil action to the Court of First Instance of Manila on
July 3, 1949 to declare the lease of the premises. On February 9, 1950, the Municipal Court of Manila
rendered judgment ordering the ejectment of Mrs. Yulo and Mr. Yang. The judgment was appealed. In the
Court of First Instance, the two cases were afterwards heard jointly, and judgment was rendered dismissing
the complaint of Mrs. Yulo and her husband, and declaring the contract of lease of the premises terminated
as of July 31, 1949, and fixing the reasonable monthly rentals of said premises at P100. Both parties
appealed from said decision and the Court of Appeals, on April 30, 1955, affirmed the judgment.
On October 27, 1950, Mrs. Yulo demanded from Yang Chiao Seng her share in the profits of the business.
Yang answered the letter saying that upon the advice of his counsel he had to suspend the payment (of the
rentals) because of the pendency of the ejectment suit by the owners of the land against Mrs. Yulo. In this
letter Yang alleges that inasmuch as he is a sublessee and inasmuch as Mrs. Yulo has not paid to the
lessors the rentals from August, 1949, he was retaining the rentals to make good to the landowners the
rentals due from Mrs. Yulo in arrears (Exh. "E").
In view of the refusal of Yang to pay her the amount agreed upon, Mrs. Yulo instituted this action on May 26,
1954, alleging the existence of a partnership between them and that the defendant Yang Chiao Seng has
refused to pay her share from December, 1949 to December, 1950; that after December 31, 1950 the
partnership between Mrs. Yulo and Yang terminated, as a result of which, plaintiff became the absolute
owner of the building occupied by the Cine Astor; that the reasonable rental that the defendant should pay
therefor from January, 1951 is P5,000; that the defendant has acted maliciously and refuses to pay the
participation of the plaintiff in the profits of the business amounting to P35,000 from November, 1949 to
October, 1950, and that as a result of such bad faith and malice on the part of the defendant, Mrs. Yulo has
suffered damages in the amount of P160,000 and exemplary damages to the extent of P5,000. The prayer
includes a demand for the payment of the above sums plus the sum of P10,000 for the attorney's fees.
In answer to the complaint, defendant alleges that the real agreement between the plaintiff and the
defendant was one of lease and not of partnership; that the partnership was adopted as a subterfuge to get
around the prohibition contained in the contract of lease between the owners and the plaintiff against the
sublease of the said property. As to the other claims, he denies the same and alleges that the fair rental
value of the land is only P1,100. By way of counterclaim he alleges that by reason of an attachment issued
against the properties of the defendant the latter has suffered damages amounting to P100,000.
The first hearing was had on April 19, 1955, at which time only the plaintiff appeared. The court heard
evidence of the plaintiff in the absence of the defendant and thereafter rendered judgment ordering the
defendant to pay to the plaintiff P41,000 for her participation in the business up to December, 1950; P5,000
as monthly rental for the use and occupation of the building from January 1, 1951 until defendant vacates
the same, and P3,000 for the use and occupation of the lobby from July 1, 1945 until defendant vacates the
property. This decision, however, was set aside on a motion for reconsideration. In said motion it is claimed
that defendant failed to appear at the hearing because of his honest belief that a joint petition for
postponement filed by both parties, in view of a possible amicable settlement, would be granted; that in view
of the decision of the Court of Appeals in two previous cases between the owners of the land and the plaintiff
Rosario Yulo, the plaintiff has no right to claim the alleged participation in the profit of the business, etc. The
court, finding the above motion, well-founded, set aside its decision and a new trial was held. After trial the
court rendered the decision making the following findings: that it is not true that a partnership was created
between the plaintiff and the defendant because defendant has not actually contributed the sum mentioned
in the Articles of Partnership, or any other amount; that the real agreement between the plaintiff and the
defendant is not of the partnership but one of the lease for the reason that under the agreement the plaintiff
did not share either in the profits or in the losses of the business as required by Article 1769 of the Civil
Code; and that the fact that plaintiff was granted a "guaranteed participation" in the profits also belies the
supposed existence of a partnership between them. It. therefore, denied plaintiff's claim for damages or
supposed participation in the profits.
As to her claim for damages for the refusal of the defendant to allow the use of the supposed lobby of the
theatre, the court after ocular inspection found that the said lobby was very narrow space leading to the
balcony of the theatre which could not be used for business purposes under existing ordinances of the City
of Manila because it would constitute a hazard and danger to the patrons of the theatre. The court, therefore,
dismissed the complaint; so did it dismiss the defendant's counterclaim, on the ground that the defendant
failed to present sufficient evidence to sustain the same. It is against this decision that the appeal has been
prosecuted by plaintiff to this Court.
The first assignment of error imputed to the trial court is its order setting aside its former decision and
allowing a new trial. This assignment of error is without merit. As that parties agreed to postpone the trial
because of a probable amicable settlement, the plaintiff could not take advantage of defendant's absence at
the time fixed for the hearing. The lower court, therefore, did not err in setting aside its former judgment. The
final result of the hearing shown by the decision indicates that the setting aside of the previous decision was
in the interest of justice.
In the second assignment of error plaintiff-appellant claims that the lower court erred in not striking out the
evidence offered by the defendant-appellee to prove that the relation between him and the plaintiff is one of
the sublease and not of partnership. The action of the lower court in admitting evidence is justified by the
express allegation in the defendant's answer that the agreement set forth in the complaint was one of lease
and not of partnership, and that the partnership formed was adopted in view of a prohibition contained in
plaintiff's lease against a sublease of the property.
The most important issue raised in the appeal is that contained in the fourth assignment of error, to the effect
that the lower court erred in holding that the written contracts, Exhs. "A", "B", and "C, between plaintiff and
defendant, are one of lease and not of partnership. We have gone over the evidence and we fully agree with
the conclusion of the trial court that the agreement was a sublease, not a partnership. The following are the
requisites of partnership: (1) two or more persons who bind themselves to contribute money, property, or
industry to a common fund; (2) intention on the part of the partners to divide the profits among themselves.
(Art. 1767, Civil Code.).
In the first place, plaintiff did not furnish the supposed P20,000 capital. In the second place, she did not
furnish any help or intervention in the management of the theatre. In the third place, it does not appear that
she has ever demanded from defendant any accounting of the expenses and earnings of the business. Were
she really a partner, her first concern should have been to find out how the business was progressing,
whether the expenses were legitimate, whether the earnings were correct, etc. She was absolutely silent
with respect to any of the acts that a partner should have done; all that she did was to receive her share of
P3,000 a month, which can not be interpreted in any manner than a payment for the use of the premises
which she had leased from the owners. Clearly, plaintiff had always acted in accordance with the original
letter of defendant of June 17, 1945 (Exh. "A"), which shows that both parties considered this offer as the
real contract between them.
Plaintiff claims the sum of P41,000 as representing her share or participation in the business from
December, 1949. But the original letter of the defendant, Exh. "A", expressly states that the agreement
between the plaintiff and the defendant was to end upon the termination of the right of the plaintiff to the
lease. Plaintiff's right having terminated in July, 1949 as found by the Court of Appeals, the partnership
agreement or the agreement for her to receive a participation of P3,000 automatically ceased as of said
date.
We find no error in the judgment of the court below and we affirm it ​in toto​, with costs against
plaintiff-appellant.
G.R. No. L-4935 May 28, 1954
J. M. TUASON & CO., INC., represented by it Managing PARTNER, GREGORIA ARANETA, INC.,
plaintiff-appellee,
vs.
QUIRINO BOLAÑOS,​ defendant-appellant.
This is an action originally brought in the Court of First Instance of Rizal, Quezon City Branch, to recover
possession of registered land situated in barrio Tatalon, Quezon City.
Plaintiff's complaint was amended three times with respect to the extent and description of the land sought to
be recovered. The original complaint described the land as a portion of a lot registered in plaintiff's name
under Transfer Certificate of Title No. 37686 of the land record of Rizal Province and as containing an area
of 13 hectares more or less. But the complaint was amended by reducing the area of 6 hectares, more or
less, after the defendant had indicated the plaintiff's surveyors the portion of land claimed and occupied by
him. The second amendment became necessary and was allowed following the testimony of plaintiff's
surveyors that a portion of the area was embraced in another certificate of title, which was plaintiff's Transfer
Certificate of Title No. 37677. And still later, in the course of trial, after defendant's surveyor and witness,
Quirino Feria, had testified that the area occupied and claimed by defendant was about 13 hectares, as
shown in his Exhibit 1, plaintiff again, with the leave of court, amended its complaint to make its allegations
conform to the evidence.
Defendant, in his answer, sets up prescription and title in himself thru "open, continuous, exclusive and
public and notorious possession (of land in dispute) under claim of ownership, adverse to the entire world by
defendant and his predecessor in interest" from "time in-memorial". The answer further alleges that
registration of the land in dispute was obtained by plaintiff or its predecessors in interest thru "fraud or error
and without knowledge (of) or interest either personal or thru publication to defendant and/or predecessors in
interest." The answer therefore prays that the complaint be dismissed with costs and plaintiff required to
reconvey the land to defendant or pay its value.
After trial, the lower court rendered judgment for plaintiff, declaring defendant to be without any right to the
land in question and ordering him to restore possession thereof to plaintiff and to pay the latter a monthly
rent of P132.62 from January, 1940, until he vacates the land, and also to pay the costs.
Appealing directly to this court because of the value of the property involved, defendant makes the following
assignment or errors:
I. The trial court erred in not dismissing the case on the ground that the case was not brought by the real
property in interest.
II. The trial court erred in admitting the third amended complaint.
III. The trial court erred in denying defendant's motion to strike.
IV. The trial court erred in including in its decision land not involved in the litigation.
V. The trial court erred in holding that the land in dispute is covered by transfer certificates of Title Nos.
37686 and 37677.
Vl. The trial court erred in not finding that the defendant is the true and lawful owner of the land.
VII. The trial court erred in finding that the defendant is liable to pay the plaintiff the amount of P132.62
monthly from January, 1940, until he vacates the premises.
VIII. The trial court erred in not ordering the plaintiff to reconvey the land in litigation to the defendant.
As to the first assigned error, there is nothing to the contention that the present action is not brought by the
real party in interest, that is, by J. M. Tuason and Co., Inc. What the Rules of Court require is that an action
be brought ​in the name of, but not necessarily ​by,​ the real party in interest. (Section 2, Rule 2.) In fact the
practice is for an attorney-at-law to bring the action, that is to file the complaint, in the name of the plaintiff.
That practice appears to have been followed in this case, since the complaint is signed by the law firm of
Araneta and Araneta, "counsel for plaintiff" and commences with the statement "comes now plaintiff, through
its undersigned counsel." It is true that the complaint also states that the plaintiff is "represented herein by its
Managing Partner Gregorio Araneta, Inc.", another corporation, but there is nothing against one corporation
being represented by another person, natural or juridical, in a suit in court. The contention that Gregorio
Araneta, Inc. can not act as managing partner for plaintiff on the theory that it is illegal for two corporations to
enter into a partnership is without merit, for the true rule is that "though a corporation has no power to enter
into a partnership, it may nevertheless enter into a joint venture with another where the nature of that venture
is in line with the business authorized by its charter." (Wyoming-Indiana Oil Gas Co. ​vs​. Weston, 80 A. L. R.,
1043, citing 2 Fletcher Cyc. of Corp., 1082.) There is nothing in the record to indicate that the venture in
which plaintiff is represented by Gregorio Araneta, Inc. as "its managing partner" is not in line with the
corporate business of either of them.
Errors II, III, and IV, referring to the admission of the third amended complaint, may be answered by mere
reference to section 4 of Rule 17, Rules of Court, which sanctions such amendment. It reads:
Sec. 4. ​Amendment to conform to evidence​. — When issues not raised by the pleadings are tried by express
or implied consent of the parties, they shall be treated in all respects, as if they had been raised in the
pleadings. Such amendment of the pleadings as may be necessary to cause them to conform to the
evidence and to raise these issues may be made upon motion of any party at my time, even of the trial of
these issues. If evidence is objected to at the trial on the ground that it is not within the issues made by the
pleadings, the court may allow the pleadings to be amended and shall be so freely when the presentation of
the merits of the action will be subserved thereby and the objecting party fails to satisfy the court that the
admission of such evidence would prejudice him in maintaining his action or defense upon the merits. The
court may grant a continuance to enable the objecting party to meet such evidence.
Under this provision amendment is not even necessary for the purpose of rendering judgment on issues
proved though not alleged. Thus, commenting on the provision, Chief Justice Moran says in this Rules of
Court:
Under this section, American courts have, under the New Federal Rules of Civil Procedure, ruled that where
the facts shown entitled plaintiff to relief other than that asked for, no amendment to the complaint is
necessary, especially where defendant has himself raised the point on which recovery is based, and that the
appellate court treat the pleadings as amended to conform to the evidence, although the pleadings were not
actually amended. (I Moran, Rules of Court, 1952 ed., 389-390.)
Our conclusion therefore is that specification of error II, III, and IV are without merit..
Let us now pass on the errors V and VI. Admitting, though his attorney, at the early stage of the trial, that the
land in dispute "is that described or represented in Exhibit A and in Exhibit B enclosed in red pencil with the
name Quirino Bolaños," defendant later changed his lawyer and also his theory and tried to prove that the
land in dispute was not covered by plaintiff's certificate of title. The evidence, however, is against defendant,
for it clearly establishes that plaintiff is the registered owner of lot No. 4-B-3-C, situate in barrio Tatalon,
Quezon City, with an area of 5,297,429.3 square meters, more or less, covered by transfer certificate of title
No. 37686 of the land records of Rizal province, and of lot No. 4-B-4, situated in the same barrio, having an
area of 74,789 square meters, more or less, covered by transfer certificate of title No. 37677 of the land
records of the same province, both lots having been originally registered on July 8, 1914 under original
certificate of title No. 735. The identity of the lots was established by the testimony of Antonio Manahan and
Magno Faustino, witnesses for plaintiff, and the identity of the portion thereof claimed by defendant was
established by the testimony of his own witness, Quirico Feria. The combined testimony of these three
witnesses clearly shows that the portion claimed by defendant is made up of a part of lot 4-B-3-C and major
on portion of lot 4-B-4, and is well within the area covered by the two transfer certificates of title already
mentioned. This fact also appears admitted in defendant's answer to the third amended complaint.
As the land in dispute is covered by plaintiff's Torrens certificate of title and was registered in 1914, the
decree of registration can no longer be impugned on the ground of fraud, error or lack of notice to defendant,
as more than one year has already elapsed from the issuance and entry of the decree. Neither court the
decree be collaterally attacked by any person claiming title to, or interest in, the land prior to the registration
proceedings. (Soroñgon ​vs​. Makalintal,​1 45 Off. Gaz., 3819.) Nor could title to that land in derogation of that
of plaintiff, the registered owner, be acquired by prescription or adverse possession. (Section 46, Act No.
496.) Adverse, notorious and continuous possession under claim of ownership for the period fixed by law is
ineffective against a Torrens title. (Valiente ​vs.​ Judge of CFI of Tarlac,​2 etc., 45 Off. Gaz., Supp. 9, p. 43.)
And it is likewise settled that the right to secure possession under a decree of registration does not
prescribed. (Francisco vs. Cruz, 43 Off. Gaz., 5105, 5109-5110.) A recent decision of this Court on this point
is that rendered in the case of Jose Alcantara et al., vs. Mariano et al.​ , 92 Phil., 796. This disposes of the
alleged errors V and VI.
As to error VII, it is claimed that `there was no evidence to sustain the finding that defendant should be
sentenced to pay plaintiff P132.62 monthly from January, 1940, until he vacates the premises.' But it
appears from the record that that reasonable compensation for the use and occupation of the premises, as
stipulated at the hearing was P10 a month for each hectare and that the area occupied by defendant was
13.2619 hectares. The total rent to be paid for the area occupied should therefore be P132.62 a month. It is
appears from the testimony of J. A. Araneta and witness Emigdio Tanjuatco that as early as 1939 an action
of ejectment had already been filed against defendant. And it cannot be supposed that defendant has been
paying rents, for he has been asserting all along that the premises in question 'have always been since time
immemorial in open, continuous, exclusive and public and notorious possession and under claim of
ownership adverse to the entire world by defendant and his predecessors in interest.' This assignment of
error is thus clearly without merit.
Error No. VIII is but a consequence of the other errors alleged and needs for further consideration.
During the pendency of this case in this Court appellant, thru other counsel, has filed a motion to dismiss
alleging that there is pending before the Court of First Instance of Rizal another action between the same
parties and for the same cause and seeking to sustain that allegation with a copy of the complaint filed in
said action. But an examination of that complaint reveals that appellant's allegation is not correct, for the
pretended identity of parties and cause of action in the two suits does not appear. That other case is one for
recovery of ownership, while the present one is for recovery of possession. And while appellant claims that
he is also involved in that order action because it is a class suit, the complaint does not show that such is
really the case. On the contrary, it appears that the action seeks relief for each individual plaintiff and not
relief for and on behalf of others. The motion for dismissal is clearly without merit.
Wherefore, the judgment appealed from is affirmed, with costs against the plaintiff.
G.R. Nos. L-32347-53 December 26, 1973
AGUSTIN ABONG, ​petitioner,
vs.
THE WORKMEN'S COMPENSATION COMMISSION, NELLY BALLARES, ANACORITA DAHIL-DAHIL,
MANUEL LAHAO-LAHAO, CONCHITA MONTEROYO, SHIRLEY LOZADA and ROSARIO ALOVA,
respondents.
I. STATEMENT OF THE CASE
Appeal by ​certiorari from the decision of the Workmen's Compensation Commission, awarding
compensation to private respondents.
II. FACTS OF THE CASE
The undisputed facts as borne out by the record are follows:
Aladino Dionson, Filomeno Umbria, Noel Lahao-lahao, Juanita Monteroyo and Wilfredo Monteroyo and
Demetrio Escoreal, all decent were members of a fishing outfit, the "IWAG" or more popularly called the
"ALEX", owned by petitioner herein, Dr. Agustino R. Abong.
On May 15, 1966, this fishing outfit set out to sea somewhat off the coast of Northern Negros. The
decedents were among the 70 crew members who were loaded on two big bancas, 8 small fishing boats
locally known as "lawagan" and one towing motorboat. While they were, thus, fishing, typhoon "IRMA"
passed along their way, scattering the boats and blowing them far out into the open sea. The tragedy netted
eight (8) dead while some sixty (60) men survived the disaster.​1
As a consequence of the incident seven (7) notices and claims for death compensation were filed with the
Bacolod Sub-Regional Office (or Regional Office No. VII) of the Department of Labor by herein private
respondents on June 1, 1966. A copy of the notices and claims were sent to petitioner Dr. Agustino R.
Abong by registered mail at his place of business, but the envelopes containing said notices and claims were
returned unclaimed, although petitioner was personally notified thrice. Thereafter, counsel for private
respondents on July 6, 1966, and July 14, 1966, respectively, filed an ​ex-parte motion with the Bacolod
Sub-Regional Office of the Workmen's Compensation Commission to declare petitioner in default, which
motion was granted. Thereupon, claimants were allowed to present their evidence. Finding the claims of the
private respondents to be allied in nature, the cases were consolidated.​2
After due hearing before Acting Referee, Bertito D. Dadivas, he rendered on August 1, 1966, a decision
granting the claims, the pertinent portions of which are quoted as follows:
In the light of the testimonies of herein claimants and their principal witness, Filomeno Pason, who is a
survivor of that unfortunate tragedy and who personally witnessed the deaths of all eight (8) deceased
workers of respondent, there is no doubt at all that their deaths arose out of and in the course of their
employment as "washing" or helpers and light tenders of respondent Dr. Agustino R. Abong. Under Sections
2 and 8 of the Workmen's Compensation Act, as amended, the deaths of above deceased persons are,
therefore, compensable.
In granting this award — it should be considered that two of the eight deceased workers — Noel
Lahao-lahao and Wilfredo Monteroyo — were minors at the time of employment. Respondent herein has
also failed to submit a report of this accident "as soon as possible after the occurence of an injury resulting in
absence from work for a day or more"; nor registered himself or his business enterprise in accordance with
Sections 37 and 56 of the Workmen's Compensation Act, otherwise known as Republic Act No. 3428.
Section 4-A of the Workmen's Compensation Act provides for payment of an additional compensation equal
to fifty per centum of the compensation to be awarded, in case of failure of the employer to comply with any
order, rule or regulation of the Workmen's Compensation Act in the event of the death of the employee or
employees concerned.
Wherefore, under the law, the claimants are entitled to compensation and respondent is hereby ordered:
1. To pay to claimant, ANACORITA DAHIL-DAHIL the sum of SIX THOUSAND PESOS (P6,000.00), plus
50% penalty in the sum of THREE THOUSAND PESOS (P3,000.00), plus the further sum of TWO
HUNDRED PESOS as burial expenses, through this Office;
2. To pay to claimant, NELLY BALLARES, the sum of SIX THOUSAND PESOS (P6,000.00) plus 50%
penalty in the sum of THREE THOUSAND PESOS (P3,000.00) or the total sum of NINE THOUSAND
PESOS (P9,000.00) plus the further sum of TWO HUNDRED PESOS (P200.00), as burial expenses through
this Office;
3. To pay to claimant, MANUEL LAHAO-LAHAO, the sum of TWO THOUSAND SIX HUNDRED PESOS
(P2,600.00) plus 50% penalty in the sum of ONE THOUSAND THREE HUNDRED PESOS (P1,300.00), or
the total sum of THREE THOUSAND NINE HUNDRED PESOS (P3,900.00), plus burial expenses in the sum
of TWO HUNDRED PESOS (P200.00), through this Office;
4. To pay to claimant, SHIRLEY LOZADA, the sum of FIVE THOUSAND ONE HUNDRED TWENTY PESOS
(P5,120.00) plus 50% penalty in the sum of TWO THOUSAND FIVE HUNDRED SIXTY PESOS (P2,560.00)
or the total sum of SEVEN THOUSAND SIX HUNDRED EIGHTY PESOS (P7,680.00), plus burial expenses
of TWO HUNDRED PESOS (P200.00) through this Office;
5. To pay to claimant, ROSARIO ALOVA, the sum of SIX THOUSAND PESOS (P6,000.00) plus 50%
penalty in the sum of THREE THOUSAND PESOS (P3,000.00) or the total sum of NINE THOUSAND
PESOS (P9,000.00), plus the further sum of TWO HUNDRED PESOS (P200.00) for burial expenses,
through this Office;
6. To pay to claimant, CONCHITA MONTEROYO, the sum of SIX THOUSAND PESOS (P6,000.00) plus
50% penalty in the sum of THREE THOUSAND PESOS (P3,000.00) representing compensation for the
death of her husband, Juanito; and TWO THOUSAND SIX HUNDRED PESOS (P2,600.00) plus 50%
penalty in the sum of ONE THOUSAND THREE HUNDRED PESOS (P1,300.00) or the total sum of THREE
THOUSAND NINE HUNDRED PESOS (P3,900.00) representing compensation for the death of her son,
Wilfredo; plus the further sum of FOUR HUNDRED PESOS (P400.00) for burial expenses of Juanito and
Wilfredo Monteroyo; or a grand total for these two cases of THIRTEEN THOUSAND THREE HUNDRED
PESOS (P13,300.00), through this Office;
7. To pay to counsel for claimants, Atty. Angel F. Lobaton, Sr. the sum of TWO THOUSAND SIX HUNDRED
FORTY-FOUR PESOS (P2,644.00) as attorney's fees; and
8. To pay to the Workmen's Compensation Fund, through this Office, the sum of FIVE HUNDRED TWENTY
PESOS (P520.00), pursuant to Section 55 of the Workmen's Compensation Act, as amended."​3
On September 14, 1966, herein petitioner filed a (1) motion to set aside the order declaring him in default
and a (2) separate motion to set aside the Decision of the Acting Referee, to which seasonable oppositions
were interposed by private respondents on September 26, 1966.​4
On October 25, 1966, Acting Referee Bertito D. Dadivas issued an Order denying both motions of petitioner.​5
A motion for reconsideration was then filed by petitioner on November 4, 1966, raising, ​inter alia​, the
fundamental question of jurisdiction and denial of due process.​6 An opposition thereto was interposed by
private respondents on November 10, 1966.​7
On March 23, 1970, Associate (Medical) Commissioner Herminia Castelo-Sotto, M.D., of the Workmen
Compensation Commission rendered a decision affirming the earlier decision of the referee.​8
On April 17, 1970, petitioner sought the review of the decision of Associate (Medical) Commission
Castelo-Sotto by the respondent Workmen's Compensation Commission sitting ​en banc,​ but the latter
however affirmed the decision with the modification that the 50% additional compensation earlier imposed as
penalty was eliminated, in its resolution of July 7, 1970.​9
Dissatisfied with the verdict, petitioner came to this Court for reversal of the adverse decision against him.
III. ISSUES OF THE CASE
In his brief before this Court the petitioner imputes five errors committed by respondent Workmen's
Compensation Commission, viz:
1. THE RESPONDENT COMMISSION ERRED AND/OR ACTED WITH GRAVE ABUSE OF DISCRETION
IN HOLDING THAT THERE WAS AN EMPLOYER-EMPLOYEE RELATIONSHIP BETWEEN THE
PETITIONER AND THE DECEASED CREW MEMBERS OF THE "IWAG" FISHING OUTFIT.
2. THE RESPONDENT COMMISSION ERRED AND/OR ACTED WITH GRAVE ABUSE OF DISCRETION
IN NOT DECLARING ITSELF WITHOUT JURISDICTION OVER THE CLAIMS FOR DEATH BENEFITS.
3. THE RESPONDENT COMMISSION ERRED AND/OR ACTED WITH GRAVE ABUSE OF DISCRETION
IN FINDING THAT THE DEATH OF THE DECEASED CREW MEMBER IS COMPENSABLE UNDER THE
WORKMEN'S COMPENSATION ACT, AS AMENDED, IN FINDING PETITIONER LIABLE FOR THE
PAYMENT OF SUCH COMPENSATION.
4. THE RESPONDENT COMMISSION ERRED AND/OR ACTED WITH GRAVE ABUSE OF DISCRETION
IN DENYING PETITIONER HIS RIGHT TO BE HEARD.
5. THE RESPONDENT COMMISSION ERRED AND/OR ACTED WITH GRAVE ABUSE OF DISCRETION,
AMOUNTING TO LACK OF JURISDICTION, IN GRANTING EXCESSIVE AWARDS TO THE CLAIMANTS.
The pivotal issue requiring determination is who is the statutory employer of the decedents and who should
be liable for their death compensation. Nevertheless, We take up the merits of the points raised ​ad seriatim.​
IV. DISCUSSION
As regards the first three interrelated assigned errors, there is a faint attempt by petitioner Agustino R.
Abong to evade liability by advancing the theory that he had absolutely no voice or intervention in the choice,
hiring, dismissing, control, supervision and compensation of the fishermen-crew members, and that these
matters, which are the essence of employer-employee relationship, are the sole responsibility of the team
leader, Simplicio Panganiban, and the team-members or crew pursuant to their Agreement (Exhibit "G"). 10 ​ is an independent contractor in the same, or for any other reason, is not the direct employer of laborers
The contention of petitioner is devoid of merit. It should be pointed out that this case is an appeal from the
decision of the Workmen's Compensation Commission. And in this class of proceedings, only questions of
law should be raised, the findings of facts made by the Commission being conclusive and binding upon this
​ Although this Court is authorized to inquire into the facts, it only does so when the conclusions
Court. 11
therefrom are not supported by the evidence. In the case at bar, however, this Court finds the findings of fact
made by Associate (Medical) Commissioner Herminia Castelo-Sotto, M.D., and concurred in by the
Commission en banc to be fully supported by the evidence on record which clearly points out that petitioner
Agustino R. Abong is the statutory employer of the decedents. In ruling for the deceased workers, the
Commission said:
... After a careful review of the evidence and the records, We are inclined to agree with the proposition,
advanced by the claimant's counsel that there existed an employer-employee relationship between the
respondent and the decedents. Not only that the said deceased workers worked for and in the interest of the
business of the herein respondent. But that they were subject to the control, supervision, and dismissal of
the respondent, thru its agent, Simplicio Panganiban, the alleged "partner" of herein respondent. And while
these workers were paid in kind, or by "pakiao basis" still that fact did not alter the character of their
relationship with the respondent as employees of the latter. The intervention of Simplicio Panganiban, in this
case, is merely that of an agent or intermediary between the owner of the fishing boat and the members of
its crew. In short, Panganiban is merely the person charged by Dr. Abong to recruit the said fishermen to
work for and for the enforcement of the business venture of herein respondent.
The proposition, on the other hand, of the respondent's counsel, that Dr. Abong was not the employer of the
decedents, simply because of an alleged partnership agreement, executed on March 23, 1962, between the
respondent, Dr. Agustino R. Abong, as "Financier" and Simplicio Panganiban, as his "Team leader", is
intended certainly as a very clever device designed primarily to exempt the employer from answering any
liability under the provisions of the Workmen's Compensation Act, as amended.
The said contract of partnership while it may be considered as valid and lawful, between the signatories
thereto, the respondent Dr. Abong and his "partner" or agent, Simplicio Panganiban, nowhere in that said
agreement did the decedents or their heirs in interests take any participation or manifested their conformity
to the said covenant. Thus, even if we consider this contract as valid and enforceable between them, it
cannot bind the non-signatories thereto, like the deceased fishermen.
The case invoked by the respondent (Pajarillo, et al., vs. Social Security System, G.R. No. L-21930, August
31, 1966) can not be legally applied in the instant case, for the simple reason that the facts in that aforesaid
case are not the same as those in the case at bar. Moreover, we are of the view, that the said Pajarillo case
may be good only as far as the Social Security System, for purposes of membership thereat, is concerned
and is not readily applicable to cases involving Workmen's Compensation claims as the one at bar. For here,
the contract of partnership, if valid, only binds the parties thereto, and the decedents in this case, as the
records will show, were never a party signatory thereto. How then can we tie them to that partnership
agreement when it only holds the two-party, Abong and Panganiban, as the sole partners in that agreement?
Furthermore, even if Panganiban will be considered as an independent contractor, which he is not, his
position as such will not relieve the employer, respondent Abong, from his liability under the Act. It is
well-defined in the Act, that an employer includes every person or association of persons, incorporated or
not, public or private, and the legal representatives of the deceased employer. It includes the owner or
manager of the business carried on in the establishment or place of work but who, for the reason that there
employed there. (Section 39, paragraph[s], Workmen's Compensation Act, as amended).
xxx xxx xxx 12​
As pointed out by the Commission's findings, the fundamental bases showing that petitioner, Dr. Agustino R.
Abong, is the employer, are present, namely, the selection and engagement of the employee; the payment of
wages; the power of dismissal and the employer's power to control the employees' conduct. 13 ​ These powers
were lodged in petitioner Abong, thru his agent, Simplicio Panganiban, whom he alleges to be his "partner".
On this score alone, the petitioner for review must fail. It is well-settled that employer-employee relationship
involves findings of fact which are conclusive and binding and not subject to review by this Court. 14 ​
Petitioner also argues that he was denied his right to heard. 15​ It is contended that petitioner was not properly
notified of the proceedings against him.
The assigned error merits scant consideration. Proper notices and claims for compensation together with a
formal letter to accomplish WCC Form No. 3 — Employer's Report Accident or Sickness — were duly served
upon petitioner at his place of business in Sagay, Negros Occidental. 16 ​ His failure to claim his mail and to
answer the claims or controvert the same and to accomplish WCC Form No. 3, are fatal errors which cannot
be repaired at this time. It needs no argument to show that service by registered mail is deemed completed
upon petitioner's failure to claim his mail from the post office within five (5) days from the first notice sent by
 ​ The further contention that the "notices" should have been sent his place of residence in
the postmaster. 17
Income:
Bacolod City is of no moment either. Section 26 of Republic Act No. 3428, as amended, provides:

Member's shares............................ 97,263.70

SEC. 26. Delivery of notice and claim ... . The notices shall be served by personal delivery or by sending it
by registered letter addressed to the employer at his last known residence or ​at his place of business​.
Credits paid................................ 6,196.55
(Emphasis supplied)
Clearly, there was no error in sending petitioner's mails to his place of business at Sagay, Negros
Interest received........................... 4,569.45
Occidental.
And now We come to the last point. It is contended that respondent Commission erred in granting excessive
Miscellaneous............................... 1,891.00
awards the claimants.
We find this contention incorrect. The Commission's findings relative to the wages of the decedents are P109,620.70
findings facts which are not open to review by this Court as the same are supported by substantial evidence
​ We, therefore, find no cogent reason to disturb the Commission's findings on this point.
on record. 18​ Expenses:

V. CONCLUSION
Under the circumstances, private respondents' claim should be upheld not only because they are supported Premiums to members....................... 68,146.25
by the evidence on record, but also because the Workmen's Compensation Act is a social legislation
designed to give relief to the workman who has been the victim of an accident in the pursuit of his Loans on real-estate....................... 9,827.00
employment, and the law must be liberally construed to attain the purpose for which it was enacted. 19 ​
Moreover, this Tribunal finds no reason in this case to depart from the rule which limits its appellate Loans on promissory notes.............. 4,258.55
jurisdiction to the review of errors of law only, accepting as conclusive the factual findings of the Workmen's
Compensation Commission which in this case are supported by substantial evidence. Salaries.................................... 1,095.00

VI. JUDGMENT
Miscellaneous............................... 1,686.10
ACCORDINGLY, the assailed decision is hereby fully affirmed.
85,012.90

G.R. No. 31057 September 7, 1929 Cash on hand........................................ 24,607.80

ADRIANO ARBES, ET AL.,​ plaintiffs-appellees,
vs.
VICENTE POLISTICO, ET AL.,​ defendants-appellants.
This is an action to bring about liquidation of the funds and property of the association called "Turnuhan
Polistico & Co." The plaintiffs were members or shareholders, and the defendants were designated as
president-treasurer, directors and secretary of said association.
It is well to remember that this case is now brought before the consideration of this court for the second time.
The first one was when the same plaintiffs appeared from the order of the court below sustaining the
defendant's demurrer, and requiring the former to amend their complaint within a period, so as to include all
the members of "Turnuhan Polistico & Co.," either as plaintiffs or as a defendants. This court held then that
in an action against the officers of a voluntary association to wind up its affairs and enforce an accounting for
money and property in their possessions, it is not necessary that all members of the association be made
parties to the action. (Borlasa vs. Polistico, 47 Phil., 345.) The case having been remanded to the court of
origin, both parties amend, respectively, their complaint and their answer, and by agreement of the parties,
the court appointed Amadeo R. Quintos, of the Insular Auditor's Office, commissioner to examine all the
books, documents, and accounts of "Turnuhan Polistico & Co.," and to receive whatever evidence the
parties might desire to present.
The commissioner rendered his report, which is attached to the record, with the following resume:
The defendants objected to the commissioner's report, but the trial court, having examined the reasons for
the objection, found the same sufficiently explained in the report and the evidence, and accepting it,
rendered judgment, holding that the association "Turnuhan Polistico & Co." is unlawful, and sentencing the
defendants jointly and severally to return the amount of P24,607.80, as well as the documents showing the
uncollected credits of the association, to the plaintiffs in this case, and to the rest of the members of the said
association represented by said plaintiffs, with costs against the defendants.
The defendants assigned several errors as grounds for their appeal, but we believe they can all be reduced
to two points, to wit: (1) That not all persons having an interest in this association are included as plaintiffs or
defendants; (2) that the objection to the commissioner's report should have been admitted by the court
below.
As to the first point, the decision on the case of Borlasa vs. Polistico, ​supra,​ must be followed.
With regard to the second point, despite the praiseworthy efforts of the attorney of the defendants, we are of
opinion that, the trial court having examined all the evidence touching the grounds for the objection and
having found that they had been explained away in the commissioner's report, the conclusion reached by the
court below, accepting and adopting the findings of fact contained in said report, and especially those
referring to the disposition of the association's money, should not be disturbed.
In Tan Dianseng Tan Siu Pic vs. Echauz Tan Siuco (5 Phil., 516), it was held that the findings of facts made
by a referee appointed under the provisions of section 135 of the Code of Civil Procedure stand upon the
same basis, when approved by the Court, as findings made by the judge himself. And in Kriedt vs. E. C.
McCullogh & Co.(37 Phil., 474), the court held: "Under section 140 of the Code of Civil Procedure it is made
the duty of the court to render judgment in accordance with the report of the referee unless the court shall
unless for cause shown set aside the report or recommit it to the referee. This provision places upon the
litigant parties of the duty of discovering and exhibiting to the court any error that may be contained therein."
The appellants stated the grounds for their objection. The trial examined the evidence and the
commissioner's report, and accepted the findings of fact made in the report. We find no convincing
arguments on the appellant's brief to justify a reversal of the trial court's conclusion admitting the
commissioner's findings.
There is no question that "Turnuhan Polistico & Co." is an unlawful partnership (U.S. vs. Baguio, 39 Phil.,
962), but the appellants allege that because it is so, some charitable institution to whom the partnership
funds may be ordered to be turned over, should be included, as a party defendant. The appellants refer to
article 1666 of the Civil Code, which provides:
A partnership must have a lawful object, and must be established for the common benefit of the partners.
When the dissolution of an unlawful partnership is decreed, the profits shall be given to charitable institutions
of the domicile of the partnership, or, in default of such, to those of the province.
Appellant's contention on this point is untenable. According to said article, no charitable institution is a
necessary party in the present case of determination of the rights of the parties. The action which may arise
from said article, in the case of unlawful partnership, is that for the recovery of the amounts paid by the
member from those in charge of the administration of said partnership, and it is not necessary for the said
parties to base their action to the existence of the partnership, but on the fact that of having contributed
some money to the partnership capital. And hence, the charitable institution of the domicile of the
partnership, and in the default thereof, those of the province are not necessary parties in this case. The
article cited above permits no action for the purpose of obtaining the earnings made by the unlawful
partnership, during its existence as result of the business in which it was engaged, because for the purpose,
as Manresa remarks, the partner will have to base his action upon the partnership contract, which is to annul
and without legal existence by reason of its unlawful object; and it is self evident that what does not exist
cannot be a cause of action. Hence, paragraph 2 of the same article provides that when the dissolution of
the unlawful partnership is decreed, the profits cannot inure to the benefit of the partners, but must be given
to some charitable institution.
We deem in pertinent to quote Manresa's commentaries on article 1666 at length, as a clear explanation of
the scope and spirit of the provision of the Civil Code which we are concerned. Commenting on said article
Manresa, among other things says:
When the subscriptions of the members have been paid to the management of the partnership, and
employed by the latter in transactions consistent with the purposes of the partnership may the former
demand the return of the reimbursement thereof from the manager or administrator withholding them?
Apropos of this, it is asserted: If the partnership has no valid existence, if it is considered juridically
non-existent, the contract entered into can have no legal effect; and in that case, how can it give rise to an
action in favor of the partners to judicially demand from the manager or the administrator of the partnership
capital, each one's contribution?
The authors discuss this point at great length, but Ricci decides the matter quite clearly, dispelling all doubts
thereon. He holds that the partner who limits himself to demanding only the amount contributed by him need
not resort to the partnership contract on which to base his action. And he adds in explanation that the partner
makes his contribution, which passes to the managing partner for the purpose of carrying on the business or
industry which is the object of the partnership; or in other words, to breathe the breath of life into a
partnership contract with an objection forbidden by law. And as said contrast does not exist in the eyes of the
law, ​the purpose from which the contribution was made has not come into existence, and the administrator of
the partnership holding said contribution retains what belongs to others, ​without any consideration;​ for which
reason he is not bound to return it and he who has paid in his share is entitled to recover it.
But this is not the case with regard to profits earned in the course of the partnership, because they do not
constitute or represent the partner's contribution but are the result of the industry, business or speculation
which is the object of the partnership, and therefor, in order to demand the proportional part of the said
profits, the partner would have to base his action on the contract which is null and void, since this partition or
distribution of the profits is one of the juridical effects thereof. Wherefore considering this contract as
non-existent​, by reason of its illicit object, it cannot give rise to the necessary action, which must be the basis
of the judicial complaint. Furthermore, it would be immoral and unjust for the law to permit a profit from an
industry prohibited by it.
Hence the distinction made in the second paragraph of this article of this Code, providing that the profits
obtained by unlawful means shall not enrich the partners, but shall upon the dissolution of the partnership,
be given to the charitable institutions of the domicile of the partnership, or, in default of such, to those of the
province.
This is a new rule, unprecedented by our law, introduced to supply an obvious deficiency of the former law,
which did not describe the purpose to which those profits denied the partners were to be applied, nor state
what to be done with them.
The profits are so applied, and not the contributions, because this would be an excessive and unjust
sanction for, as we have seen, there is no reason, in such a case, for depriving the partner of the portion of
the capital that he contributed, the circumstances of the two cases being entirely different.
Our Code does not state whether, upon the dissolution of the unlawful partnership, the amounts contributed
are to be returned by the partners, because it only deals with the disposition of the profits; but the fact that
said contributions are not included in the disposal prescribed profits, shows that in consequences of said
exclusion, the general law must be followed, and hence the partners should reimburse the amount of their
respective contributions. Any other solution is immoral, and the law will not consent to the latter remaining in
the possession of the manager or administrator who has refused to return them, by denying to the partners
the action to demand them. (Manresa, Commentaries on the Spanish Civil Code, vol. XI, pp. 262-264)
The judgment appealed from, being in accordance with law, should be, as it is hereby, affirmed with costs
against the appellants; provided, however, the defendants shall pay the legal interest on the sum of
P24,607.80 from the date of the decision of the court, and provided, further, that the defendants shall deposit
this sum of money and other documents evidencing uncollected credits in the office of the clerk of the trial
court, in order that said court may distribute them among the members of said association, upon being duly
identified in the manner that it may deem proper. So ordered.